How the falling INR can help NRIs

Just 6 months ago, on 7th June, 2011, the USD – INR exchange rate was 44.8001 INR to 1 USD. On 7th December, 2011 the rate was 51.8046 INR to 1 USD. This is a depreciation of close to 16%.

Let’s take a look at the Arab Emirates Dirham.
On 7th June, 2011, it was 12.2073 INR to 1 AED. On 7th December, 2011 the rate was 14.116 INR to 1 AED. This is a depreciation of close to 16% - the same as the depreciation against the USD as is to be expected.

NRIs in the land down under aren’t left out either.
On 7th June 2011, the Australian Dollar (AUD) was worth 48.0032 INR. On 7th December, 2011 it was worth 53.246 INR. That’s a depreciation of 10.92%.

The situation is roughly the same with a lot of other currencies.
Is this good news for NRIs? Definitely. Here’s why.

For every USD, AED or AUD or other appreciated currency (for example the Euro, the British Pound, the Kuwaiti dinar have all appreciated against the INR) sent to India, you’re getting more bang for the buck. For example, on 7th June, AUD 1000 remitted to India was the equivalent of Rs. 48,003. Yesterday, it was the equivalent of Rs. 53,246. This is why remittances to India have sharply increased in the last few months. Now, as an NRI, you can take advantage of this fall in the following ways:

To start with, not only has the INR depreciated, but we are in a period of high interest rates, so NRE and NRO deposits now earn more than they did 6 months ago. Your savings help in your NRE and NRO accounts will now earn you higher interest due to this increase in rates. Current NRO account interest rates for 1 year and thereabouts is in the range of 9.00% to 9.25% at banks such as HDFC Bank and Bank of Baroda. NRO deposit rates at Standard Chartered and HSBC are lower, in the range of 7.75% to 8.25% for the same 1 year tenure.

Thanks to the depreciation of the INR, if you have invested in property in India with the help of a home loan, you can prepay more of your loan by sending back just the same amount of EMI each month, as you’ll be paying more rupees for the same amount of dollars. If you want, you can also consider adding to your real estate portfolio by buying another house. Thanks to the rupee depreciation, homes are increasingly cheaper in dollar terms. However, this of course might not be enough incentive to buy a house. You must also consider the nearness of your other life goals and the availability of surplus funds before making use of the depreciated rupee.

Even corporate FDs are currently offering double digit interest rates (with a sweetener for senior citizens) so they make a very good investment avenue for NRIs considering the current depreciated rupee. Corporate FDs such as Shriram Unnati, HDFC Ltd, DHFL and others are offering interest in the range of 9.50% to 10.25% for 1 year deposits. NRIs can invest in these deposits from their NRO account.


In conclusion, while the time is indeed right considering the depreciated rupee, it is important to keep in mind certain points before remitting additional funds to India, as an NRI:

- Consider your investment vehicle carefully. If you are investing in equity because the markets are depressed, try and avoid a lump sum investment. Opt for a Systematic Investment Plan, as we will likely see more volatility in the coming months

- If investing in equity, also consider the time horizon of this investment. When are you going to require these funds? At PersonalFN, we believe that if you’ll need the funds in less than 3 years, equity is not for you, opt for a high rated corporate FD instead

- Are you going to repatriate these funds? Repatriation rules will indicate whether you need to invest from your NRO or NRE account

- Keep your taxes in mind. If you’re investing in a house property using a home loan, utilize the home loan principal repayment deduction under Section 80C and also the interest repayment deduction under Section 24 to reduce your tax liability on income arising / accruing in India.

So keep these points in mind and make the most of the current rupee scenario.

Quiz: How well do you know India's economy?

Question 1

Which of these products is India the world's largest producer of?

Poll Choice Options
  • Wheat
  • Rice
  • Milk

Latest News

  • VW to keep adding Chinese capacity amid double-digit growth
    VW to keep adding Chinese capacity amid double-digit growth

    Volkswagen will keep adding capacity in China as the German group is counting on double-digit growth in the biggest auto market, helped by strong economic growth in interior regions. Europe's largest carmaker said in March 2013 it was planning to almost double production capacity in China to be able to make more than 4 million vehicles in its largest market by 2018. "We will further expand our capacities to be able to respond to the high market growth," Jochem Heizmann, head of VW's China …

  • India's forex reserves rise to $309.44 bn

    Mumbai, April 19 (IANS) India's foreign exchange (forex) reserves rose by $2.79 billion to $309.44 billion for the week ended April 11, Reserve Bank of India (RBI) data showed. There was a sharp jump in ... …

  • Landslides close Jammu-Srinagar highway

    Jammu, April 19 (IANS) Heavy downpour triggered landslides in the Ramban sector of Jammu-Srinagar highway Saturday, leading to the closure of the road for vehicular traffic. Traffic officials said nightlong rain triggered landslides in Ramban sector, 150 km from winter capital Jammu, on Saturday. "Traffic on the highway has been suspended because of landslides at some places in Ramban sector of Jammu-Srinagar highway today. "Intending passengers are advised to contact the traffic control …

  • China Resources chairman sacked amid corruption investigation
    China Resources chairman sacked amid corruption investigation

    A Chinese executive under investigation for suspected corruption has been sacked as chairman of powerful state-owned conglomerate China Resources Holdings Co. Ltd., the official Xinhua news agency said on Saturday. Citing an official with the Organization Department of the ruling Communist Party's Central Committee, Xinhua said Song Lin was fired because he was suspected of "serious discipline and law violations" - party shorthand for corruption. Song appears to be the latest official to fall …

  • Health Care Spending’s Recent Surge Stirs Unease

    Policy experts wonder whether the government and private businesses can control spending as the economy gets stronger and millions more Americans gain coverage. …


  • This might well be India’s biggest Ponzi scam

    It was just too good to be true. Ashok Khital, 45, displays every symptom of a man who knows he's been conned. …

  • India's star studded football league

    High and mighty including Sachin, Salman & Sun Group buy ISL teams …

  • Leaderspeak with Rajesh Janey

    Rajesh Janey, President - India & SAARC, EMC shares many firsts in his life. …

  • Seed of Doubt

    Field trials have been allowed again in India. But two decades after their global launch, genetically modified (GM) crops remain controversial. …

  • Power Hungry

    Gujarat has power round-the-clock. Most other states do not. Why this will matter in the general elections. …

  • Etcetera

    The most keenly watched contest of the current general election will be the one for the Varanasi parliamentary seat, where the Bharatiya Janata Party's prime ministerial hopeful Narendra Modi squares off ... …

  • Economy vs Democracy

    As the country gets election fever, cash comes out of mattresses and turns into liquor, gifts, and food. But it is not bad for the health of the economy, reports Sarika Malhotra from the trenches. …


  • Most Actives
    Most Actives
    NamePriceChange% Chg
  • Price % Gainers
    Price % Gainers
    NamePriceChange% Chg
  • Price % Losers
    Price % Losers
    NamePriceChange% Chg
    Recent Quotes
    Symbol Price Change % ChgChart 
    Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
    You need to enable your browser cookies to view your most recent quotes.
  • Recent Quotes News

      Sign-in to view quotes in your portfolios.

    Yahoo Cricket